The challenge for governments to make major public infrastructure projects viable is nothing new.

When John Bradfield engineered the Sydney Harbour Bridge he concluded that increases in land values and a “betterment tax" would be able to fund the expensive project.

Politics got in the way further down the track as future governments came under pressure to unwind the tax. The same thing happened for infrastructure projects in Melbourne in the 1940s, according to University of Wollongong professor Henry Ergas.

The demand for infrastructure and the difficulties funding major projects has never been more obvious. A gathering of key regulators, business leaders and politicians in Sydney on Monday reveals that almost everyone agrees that it is an issue which needs to be addressed urgently.

Former Infrastructure New South Wales chairman
Nick Greiner
says the PPP (public private partnership) model is not a failure but he acknowleges the public sector has made some mistakes and there are problems with the way the system is structured. The highly competitive nature of tender processes means there is a bias for patronage forecasts on toll roads to be a little on the higher side.

Greiner also points out there is a risk of under-estimating the cost of public debt. Governments’ ability to coerce taxpayers to pay off that debt can disguise the real resource costs of a project.

The negative public perception of infrastructure funding and a bias against privatisations on the assumption that they will lead to higher prices is also an area that experts say needs to be addressed.

Australion Consumer and Competition Commission chairman
Rod Sims
told the conference that one mistake made in the past was to privatise assets to maximise sales. It was a “bad look" to let prices double at Sydney Airport around the same time the assets were being privatised.